After a flurry of rumors that Virgin America was up for sale and an all out bidding war between Alaska Airlines and JetBlue Airways, Virgin America has officially been acquired by Alaska Airlines. The nearly $4 billion deal that would essentially create the fifth largest U.S. airline, behind American, Delta, United, and Southwest was announced by the Alaska Air Group, Alaska Airlines’ parent company, on Monday.
USA Today reported that the merger would help Alaska “expand its California presence, while creating new opportunities for growth and competition.” JetBlue, which maintains a very strong east coast network was interested in Virgin America’s lucrative West Coast network to beef up its national presence. With Alaska taking over the reigns at Virgin America, they have essentially increased their competitive advantage on the West Coast, keeping JetBlue out and giving them an expanded route network to their already significant presence in the west.
Alaska Air CEO Brad Tilden said bluntly, “We will be the airline of the West Coast.” Acquiring Virgin America gives Alaska increased access to lucrative West Coast hubs including San Francisco and Los Angeles, while maintaining its strong presence in Seattle, Anchorage, and Portland, Oregon. If the Department of Transportation approves the deal, the merger would be completed by Jan. 1, 2017.
However, not everyone is happy with the sale of Virgin America. Virgin founder Richard Branson, who was forced by the Department of Transportation to give up a voting stake in Virgin America because he is not a U.S. citizen, released a concerned statement Monday.
“I would be lying if I didn’t admit sadness that our wonderful airline is merging with another,” Branson wrote in his blog post, entitled “On Virgin America.” “Our unique and stylish product and brilliant customer service have won every major travel award. The airline has also done something almost inconceivable in the airline industry: Virgin America won the hearts and fierce loyalty of consumers around the country. People love this airline.”
Branson, however, closed on a hopeful note. “The important thing now is to ensure that once Alaska witnesses first-hand the power of the brand and the love of Virgin America customers for our product and guest experience, they too will be converts and the US traveling public will continue to benefit from all that we have started,” Branson wrote.
While all aspects of the acquisition have not been specified, Alaska Air will maintain its headquarters in Seattle and Virgin America’s Elevate loyalty program would be welcomed into Alaska’s MileagePlan program. There is still no word on how Virgin America’s brand will be worked into Alaska’s existing branding strategy.